Managing Marketing is a podcast hosted by TrinityP3 Founder and Global CEO, Darren Woolley. Each podcast is a conversation with a thought-leader, professional or practitioner of marketing and communications on the issues, insights and opportunities in the marketing management category. Ideal for marketers, advertisers, media and commercial communications professionals.

Liam Walsh, Managing Director of Amobee talks with Darren on the increased choice facing marketers today with technology companies, management consultants and agencies all competing for the marketing budget and why marketers are increasingly challenged in making these choices in the face of increasing complexity.

Transcription:

Darren:

Welcome to Managing Marketing and today I’m joined by the managing director of Amobee, Liam Walsh. Welcome, Liam.

Liam:

Thank you, Darren, I’m glad to be here.

Darren:

I’m glad you’re here as well because otherwise I’d be talking to myself. But one of the things we’ve both seen over the last few years is this incredible explosion of consultants and technology companies; the landscape is changing, isn’t it?

Liam:

It sure is. It certainly feels like the consultancies are pretty enthusiastic about this space and having some success.

Darren:

It’ll be interesting to see how they roll out. There have been some high-profile agencies being purchased around the world, particularly by Accenture but there has also a huge amount of scepticism about their ability to integrate cultures isn’t there?

I know Ben Tolley at Clarity (who did the Adam and Eve–DDB purchase in the U.K. and the Monkeys with Accenture here) said culture’s not an issue. What do you think?

Do you think there is a cultural mismatch between consultancy firms and advertising agencies?

Liam:

Yes, I do. I would typify the consulting company, by definition, as doing consulting, which means a lot of looking inside a business or thing, doing a lot of diagnosis, a lot of interrogation and a lot of thinking, a lot of planning, a lot of recommendations.

If you look at an ad agency, it does some diagnosis (not a lot) and it does some thinking (not a tremendous amount) and it does tons of execution. Do those values and cultures align? Not really.

If you simplify that even further you’ve got a bunch of people who spend a lot of time thinking and a bunch of people who spend a lot of time doing.

Darren:

But in some ways, you could argue that’s the perfect linear arrangement. You’ve got all the big thinking at the top end and as it comes down it gets to the point where we need to hand it over to someone to actually implement this and make stuff happen and that’s where agencies come in. And if we own them that means more of that client’s money ends up in our pocket rather than someone else’s.

Liam:

I think from a PNL perspective—absolutely. I can’t remember the name of the car company—Ford or GM—one of them in the States basically bought the entire supply chain for all of the parts and ten years later all the parts became really expensive, really inefficient because they weren’t very good at running those businesses; they were good at building and selling cars.

When I think that from a P&L perspective that makes sense to have more of that chain.

Darren:

End to end integration it’s called.

Liam:

But can the culture survive it?

Darren:

And that’s the point, it’s about the culture. I love advertising agencies because they have the audacity to have this group of people called the creative department, which immediately makes me think that everyone else in the agency can’t be because they’re not in the creative department.

I was one of those people in the creative department for 15 years so I felt pretty good about myself because I was surrounded by all these blinkered, Philistine, non-creative types.

Liam:

Suits.

Darren:

Yeah, but do you think that maybe the management consultants have actually expanded beyond just the thinking because when you look at say Deloitte they’ve got a huge digital practice and they’re implementing enterprise platforms and all sorts of things?

Mate, they’re all big. This is one of the things everyone remembers they could buy and sell WPP without batting an eyelid. So, we think WPP in the ad world is big. They could just come along and buy it—any one of the big consulting firms.

Liam:

Yeah, totally but I think in their digital teams they are doing more systems integration work. I don’t think they’re doing advertising strategy.

Darren:

No.

Liam:

They expressed some interest in it because it’s a big market to play in but I don’t know how successful they’ll be.

Darren:

Because of this cultural misfit you don’t think the advertising agency’s going to fit in? I did read that someone in Accenture said they actually want the culture of the Monkeys to be integrated into Accenture. They see it as a reverse engineering—that’ll be interesting—getting your chartered accountant who does your audit to do it with a layout pad and marker.

Liam:

You do see a lot of these big enterprises—forget consulting companies for a second—just go top 100 Australian listed companies—say 20-30% of those guys have an incubation or a lab and inside the lab are all the clever people who look like they’re from Marrickville and they look like they’re doing cool projects.

To move the project out into the greater org nearly always fails because the culture and 99% of the PNL is out in that major org and they go, ‘I want this new nimble culture to come out of this massive org’ and when it comes out it just dies, it just gets squashed.

So, when you look at that example of the Monkeys I can understand why you might want that culture but if it’s two percent of your workforce that’s just a pipedream. That structurally cannot happen.

Culture integration

Darren:

My concern is that they’re looking at the advertising industry from a financial point of view and the idea of having that integrated end to end because you can imagine you’ve just done a big enterprise solution into a big services company (let’s say a Telco somewhere).

It’s collected a database with all of the customer details and all of the usage of telephones and internet and things and you go, ‘gee, that would be really good to use that for marketing, wouldn’t it and why don’t we move into that channel?’ I mean you can see the logic going on in the minds of the management consultants.

Liam:

It’s tricky for two reasons. One of them is very philosophical and could be complete rubbish: any business has to like the business that it’s in. So, consulting businesses basically like consulting, dentists like being dentists, and ad people like being ad people (mostly). I’m not sure that the consultancies really like advertising.

And going into a sector you don’t really like or maybe even respect—I can’t see them being very successful.

Darren:

Mmmm, I’m wondering if they actually understand marketing and advertising beyond the idea of driving acquisition and hitting financial KPI’s through marketing, whether they understand things like brand and what a brand means.

From my perspective, it would be great if we got more accountability in marketing but I’m not sure that the accountants are going to do it.

Liam:

No, and as I said I can’t see them executing. It’s not what they do. They consult, they deploy, they leave. Sometimes they don’t even deploy; they just consult. They’re rarely there for execution. We should be able to list 20 examples of where this has worked—not companies but just projects but I can’t think of three.

Darren:

That’s because it’s a brave new world.

Liam:

It gets a lot of media attention and we can’t think of three.

Darren:

The word ‘media’ made me realise that to date all of the companies that the big consulting firms have bought are creative agencies or digital agencies. They haven’t yet made a media play and you’d have to say if you were sitting there with your financial lens on you would go, ‘that’s the area to play’ because that’s where most of the money is. And if I could find a way to disrupt and make that more accountable then it would be the rivers of gold, wouldn’t it?

Liam:

That makes more sense to where you would start because at least there’s maths in there. There’s some appreciation of IT and technology to solve problems; there’s some appreciation of that.

There’s not much ability to build tech or anything compared to a creative agency, which is the opposite side of consulting. Consulting is logic and maths. In media, there is some logic and some maths; in creative, there’s virtually nothing. There’s no scene where that synergy comes.

Looking at strategy

Darren:

The two things they’ve got is strategy and I use that in the broadest sense of the word and one of them is business strategy and the other is probably, at its best, comms strategy and at its worst, creative strategy.

Liam:

Yeah, they’re different things. When I think about strategy in a bank and I meet the Head of strategy, he or she is not talking about emotion and one big idea. That’s not what they’re talking about.

I love the fact that marketing and advertising have so many opportunities to be a strategist. You could meet a channel strategist. You could meet a comms strategist. You could meet a mobile strategist. You could meet a social media strategist.

I’m sure you’ve heard of more. What’s the most interesting one? We’ve covered most of them.

Liam:

Yeah, the only other one and it’s not a strategist but the one that’s quite hot right now is the data scientist.

Darren:

Oh yes, the data scientist.

Liam:

Not knowing really what that means except that they’re good at statistics. The difference between a scientist and an analyst is beyond me; I’ve no idea. I think with less parity it’s quite a valuable function because it’s bringing rigour and math into decision-making.

All of those strategies you referred to (and they’re true by the way) are highly objective approaches to strategy.

Darren:

I’ve written about this and they’re all sales people because I’ve yet to meet a social media strategist that wasn’t recommending social media so I figure that strategy in specialist agency means please come up with a reason why the client should spend more money with us—that’s your job description pretty much.

Liam:

That does worry me because every time I go to my surgeon he says, ‘you need surgery, buddy’. I’d hate to think he’s just a salesman. I don’t want a salesman operating on my knees; I want a doctor.

Darren:

After all he gets a direct benefit if you say ‘yes’.

Liam:

He never says don’t get the surgery.

Darren:

Let’s hope you’ve chosen well as a surgeon but he did swear an oath to do no harm but then Google did make an oath to do no evil and according to the European Union they haven’t lived up to that one either.

Liam:

I don’t know that they talk about it much these days. I haven’t heard them talking about Google a lot. It’s a lofty goal to have if you’re a listed entity.

Darren:

Exactly, but whether you can live up to it in the rush to deliver shareholder value.

Liam:

Correct.

Data scientists vs data analysts

Darren:

But back to strategy and data scientists. I’d always assumed that a data scientist, as opposed to a data analyst, is someone who could somehow take the insights found in data and put them into the context of marketing. Do you think I’ve got it wrong?

Liam:

I think that’s probably right. Because if you look at an experiment paradigm structure it maps to scientist.

Darren:

One of the big mistakes people make is they’ll get a data analyst in who’ll tell you, ‘hey, do you know 72% of people put their wallet in their left pocket rather than their right pocket’ and you go, ‘great—is that an insight?’

What you need is something that is actually usable and I think that’s the role of the data scientist; to take those pieces of information and turn them into a marketing insight that can be applied.

Liam:

It’s like attribution; it’s a nifty goal to say, ‘analyse all this data and come up with pure gold’ because that’s not really what an analyst does. He or she analyses the data and has results or gives you another version of the results but you can’t do much with it.

Darren:

Yeah, they’re looking for trends or anomalies and patterns in the data that hopefully would lead to an insight.

Liam:

I think the scientist probably does more causality inside that data.

Darren:

It’s interesting because that’s a conversation I have a lot; people who say to me, ‘data can replace research’ and I go, ‘no, data can only tell you what people do. It can’t tell you why they do it’.

Liam:

Correct.

Darren:

That’s why you still need research. Once you’ve got your insight if you want to understand the underlying causality you actually need some way of going and finding out—maybe ask them.

Full attribution of marketing

Liam:

Which leads me to my passion point, which is attribution, that technology will give us full attribution of our marketing. If we put all of the data, everything we do into this brand and it will spit out the answer to say, ‘spend this much here, that much there—we’re all done’ and people believe that’s a realistic goal.

Marketers say to me, ‘we want that’. That’s impossible and even if it could be delivered it would break on the first day because if everyone had the same attribution machine every company would all have platinum success.

And that can’t happen in a market. Only some will succeed and some will fail. And to be told, ‘here’s the answer’ is alarming.

Darren:

I think that’s one of the issues we see a lot of, which is marketers are looking for empirical solutions in exactly that way, ‘oh, we’ve got an attribution model; here is the answer’. They think that because that’s empirical that that actually means that it is the answer.

If someone says to you, ‘here’s the answer’, as a marketer, you’d go, ‘that’s the answer’ when in actual fact all attribution models are a hypothesis to apply to the data to get, hopefully, an insight.

Liam:

Correct.

Darren:

It doesn’t mean that’s it real or empirical. It just tells you that if I apply this model, this hypothesis to the set of data that I’ve got here’s the result. I love the fact that if you add numbers to anything people think that it’s empirical.

I’ve seen people add scoring on subjective performance of an agency or supplier and they somehow think that because it was given a seven that means that it’s above average. All it means is that on a scale of one to ten they were given seven. It actually means nothing about performance.

Liam:

It’s also quite worrying if you are sitting inside a marketing or advertising function and you say, ‘I want to get this system, which will give me empirical data and the answer. The CEO has an obligation to get rid of the marketing department. I mean, what would you need a marketing department for if someone else can give you the answer?

Darren:

You’re getting me into the Cynefin framework and the idea of complexity because the thing about complex systems and complexity is that it’s impossible to know cause and effect.

Liam:

You can have a stab at it.

Darren:

Well, no, because it would just be a guess. Because a complex system constantly evolves over time and it depends on the thousands and thousands of inputs so, in a marketplace even a person’s decision-making process is something that we can have a hypothesis about. And we can test the hypothesis but just because it gives you a certain result at a certain point in time is no guarantee that you’ll get that result every time.

In fact, the fact that you’ve got a result at this point in time can mean that you won’t get that same result again. The very method of measuring the result has actually changed the system for ever.

Liam:

There’s a lot there. I agree with every part of that.

Darren:

The thing that we’ve got to watch out for is that we’re heading very close to quantum physics. So, we’ll stay away from quantum physics because that says things like, ‘the observer can actually influence the outcome’. So, we’ll stay away from that because that’ll do some people’s minds in.

Liam:

We’ll be O.K though—we’re the only ones here.

Darren:

True. So, back to attribution models. I’ve seen a lot of attribution models and the ones that I particularly like (and this is a real-life case study) was that television was given a three-minute opportunity. If someone didn’t hit the website after seeing the TV ad within three minutes it was no longer attributed to that TV ad but their direct mail had up to six weeks to be attributable.

And then we started asking why? The head marketer was a big fan of direct mail. So, there you go. You can actually construct an attribution model to be a self-fulfilling prophecy, that direct mail is more effective than television.

Liam:

Even though the attribution model was clearly flawed did it have any rigour in it anywhere?

Darren:

No, that was just their attribution model. That was the one they were using to attribute the areas of investment in their marketing. So, I guess the point is, if you have an attribution model it doesn’t mean that it’s worth anything.

Liam:

No. They are subjective but I saw one with seven major different statistical models and they ran all seven and just averaged the result of the seven with the assumption being we don’t really know. All of these models are robust but have assumptions in them so they are all flawed, we’ll average them, here’s the result. Which is practical and quite sensible I think in its thinking because at least it reduces the bias in the assumptions.

Darren:

Because in some ways attribution models, we are talking the end of the process aren’t we, well not the end but the measurement of the outcomes of the activity. Let’s climb back upstream to strategy which we touched on before. I mean the first part is, it’s very hard to find really sharp marketing strategies aligned to business objectives, isn’t it?

Liam:

Very rarely seen. It’s very rare to see the business strategy anywhere near a marketing plan.

Darren:

Often marketing has been moved so many steps away from the overall business strategy that it really is just becoming a comms exercise. Here are the things we need to communicate to these people, just find the best way of doing it, is what the marketing plan becomes.

Liam:

A lot of those end goals might be unaided recall, you would know all those things better than I would, but that’s never in an annual report, it’s never at the AGM, we’ve approved unaided recall of our brand by one and a half percent, that’s not a business objective. I think most of those KPI’s at the AGM in the annual report is not marketing, is not in any briefs.

Commercial CMOs and strategic CMOs

Darren:

There’s a recent report in Harvard Business Review around what’s wrong or what’s the problem with the CMO and it was interesting, they did a study in CMO’s roles in the US and they found, it was over 500 different CMO roles, they found about 50 percent of them were what they call commercial CMO’s in that they only really did the comms and advertising; the commercial part of marketing.

Then there was 30 percent that they called strategic, they would be developing strategies for growth for the business but not actually with the responsibility of implementing them.

Liam:

Where was the responsibility?

Darren:

Well that would sit with the whole business, that would include sales and customer retail and then there was only around 20 percent, with what they call the enterprise marketer with the PNL. So only 20 percent of all CMO’s actually had PNL responsibility and responsible for driving business performance.

Now that’s in the US. It would be really interesting to see if that changed market by market. From my perspective it is indicative of, if marketing is such an important part of driving top line growth for companies, why is it so many marketers are now positioned so far away from the C suite, even with the title CMO?

Liam:

Well they have C in their title. They should be very close, Darren. From your experience do you think it is 20 percent here?

Darren:

No, I think it is interesting here that the technology companies are more likely to have a senior marketer driving growth and then after technology, service companies. At the bottom end are the manufactures and that’s where it seems to be more about being more commercial focused.

Liam:

As in advertising and promotion.

Darren:

Yeah.

Liam:

Yeah, I would tend to agree. Just reflecting on my experience it would be 20 percent at best.

Darren:

I am not even going to have a guess at what percentage it is and I think that’s because marketing is seen as a cost to business.

Liam:

Yeah.

Profit at the expense of growth

Darren:

Yet last year in the US forty eight percent of the Fortune 500 had their revenue fall year on year. So, the single biggest challenge facing business in the US has to be growth. They’ve cut their way to profit but at the expense of growth. So, if you are going to turn that around and start driving growth, where do you start?

Liam:

I’ve read that to and I haven’t given it a lot of thought but I am wondering if you analyse that a little bit maybe forty eight percent is natural.

Darren:

No, it’s the first time they’ve had revenue drops. That’s against a market growth of around two percent. On average that’s a seven and a half percent drop in revenue on those forty-eight. That’s without taking into consideration the two percent growth, so it’s actually closer to ten percent

Liam:

Because there’s these other stats about how quickly in the last ten years the Fortune 500, how quickly you exit.

Darren:

Yeah.

Liam:

As new companies move in and it’s the fastest churn ever.

Darren:

Well that would be even more reason why top line growth should be grown, because if the fastest companies are coming into the Fortune 500, the fastest growing that should be growing year on year, this is companies that have stayed, forty-eight percent have stayed in the Fortune 500 and had revenue drops.

Liam:

I would love to profile those businesses. My assumption, walking into that, is those businesses will only be legacy.

Darren:

The assumption would be.

Liam:

I know I don’t have it here. I’d place a fifty-cent bet on that because I’m bold, it probably is. It won’t be Amazon.

Darren:

But I guess the point is, if the single biggest challenge for business today is growth then the way to do that is to actually get really good at marketing in its broadest sense, isn’t it?

Liam:

Yes, and the competition now, I don’t mean competition in a general sense, the transformational shift of technology and what it does, what Amazon could do and …does, and companies do, they are so good at it, that the bar has just been raised a lot. If those companies are shrinking, if they don’t fundamentally say we do things the wrong way then they are in trouble.

Great companies and transformation

Darren:

I’d go as far to say that all those great companies like Tesla, they actually start off with the proposition of, we are here to create customers, right? So, they start off by saying, how are we going to create customers; we are going to create a great product, we are going to create a great brand around that product, we are going to create an experience of that brand that people will desire, we are not going to try and be something for everyone, you know, not everyone can afford a Tesla, right?

That’s what actually creates demand. They’re being exclusive in their pricing and in their offer, that makes it a desirable thing to have. That’s a really smart piece of marketing. Have you ever seen a Tesla ad? I don’t think they make ads for Tesla. All their fans are out there making consumer content around Tesla because it’s that strong a brand.

As soon as you turn a marketing function into just doing advertising, you’re basically saying that I am going to amputate it off the core of what marketing’s about and just chuck some money at it to try and make up for any short comings I’ve got in the rest of the marketing mix. Aren’t you?

Liam:

I was just thinking, I agree that they’re trying to solve a customer ambition or a customer problem.

Darren:

Who, Tesla?

Liam:

Yeah, Amazon, pick a cool brand, and share price and market valuation, they believe will come and it has, it has come to them. Tesla’s market valuation is very high. I think a lot of the legacy businesses approach from exactly the opposite way.

We need to maintain a market valuation or grow it incrementally through small manoeuvres and tweaking our business which is the exact opposite of what you’re seeking for all the brands that everyone is excited about, even the business community are excited about those brands. are not excited about these other brands who just tinker, and a good example is retail banking. They just tinker with products but they don’t walk in and say I want to delight my customers; that’s not how they think.

Darren:

No, they’ll say we want to be customer centric and we are going to transform so the customer is at the centre of everything we do and we’ve seen it time and time again the way they’ll express that is that they will do some advertising that tells us this is the promise and then the actual product and customer experience lets you down. And they wonder why it fails. Who knows?

Liam:

With an organisation that big, it’s hard to move a boat that big, hard to shift a culture agreed, but at the very top, the CEO can change that culture.

Darren:

Yeah, that’s where leadership comes in. If you look at GE during its phenomenal growth years, they were not just doing business as usual, you know, keeping the main boat afloat, they were looking for category opportunities, to either build or buy.

They were moving across into all sorts of new areas and building those business units as a way of constantly evolving the EG brand. From engineering to finance to all sorts of things, but that came from the top down, that was pure business leadership as to what were the opportunities to actually do that.

Liam:

It’s interesting if you look at Uber then you would say it ticks all of those boxes, but the box that was probably left unticked was internal culture. But it did everything else which is quite unusual because it’s a bit like Tesla, it really looks at why and goes how many problems can we solve with our model whether it be Uber eats or something else, just any old delivery of anything and you go wow, really impressive thinking.

Darren:

I don’t know, I think Uber disrupted one category and the thing is once you disrupt that category, what’s the next stage? I mean the whole of the automotive industry is coming to terms with the idea of autonomous vehicles and the change from fossils fuels to electric which is where Tesla comes into it.

There’s a lot of disruption in the automotive industry, but Uber’s really just disrupted the taxi business and what I like about the GE example is, if we just stuck with this then eventually we are just going to be defending that and we’ll be on a defence rather than a growth mode. Why don’t we do this, why don’t we get into medical technology, why don’t we get into aeroplanes and all of the other things we could possibly do?

Liam:

They did go broad.

Darren:

Absolutely and some would argue that they went too broad but then they would rationalise by selling divisions off. What made GE phenomenal? Leadership; absolute leadership and I think if anything that’s probably where at every level of business, it’s really hard to find great leaders.

There are entrepreneurial leaders, there are charismatic leaders but you know Jeff Bezos at Amazon is probably now the richest man in the world because he is diversifying the whole time and somehow, he convinced his shareholders, don’t take a dividend, reinvest it back into the company for what is it twenty odd years. Twenty years of saying no money this year and reinvesting it.

Liam:

I like it—twenty years that thing has been listed. Twenty years that Australian retailers have had to get ready and they’re sitting here with no plans but a bunch of complaints.

Darren:

But that’s human nature, isn’t it? Remember Y2K—1999 was when we all started worrying about getting our computers Y2K compliant. They flagged it ten years earlier.

Liam:

The difference is Y2K never happened.

Darren:

How do you know? How do you know they didn’t make everyone compliant so it wasn’t an issue?

Liam:

I don’t know actually. I don’t think they did, did they? You’ve got a better memory than me. But I think Amazon will hurt.

Darren:

The only thing I find, especially with U.S companies in Australia is that they underestimate the size of the country, the geographic size and the relatively small population. I heard recently about the Australian wine-maker who got sick of the struggle of trying to sell wines in Australia because of the vast distances to truck his wines to a relatively small population market.

So, he went to Texas because Texas has a larger population than Australia but is smaller than NSW. And all he does is sell Australian made wine in Texas. And even though he has to freight it from Australia to Texas he makes more money than he ever made in Australia.

Liam:

Is that true?

Darren:

That’s a true story. So, here’s the idea. If you’re in a market like Australia with 24 million people (I know they’re collected in cities) largely scattered across a couple of thousand kilometres why think of yourself only as an Australian company when you can go and sell anywhere you like?

I love the idea; if the market’s not right for you change markets. Don’t try and change the market; it’s too hard.

Liam:

Because that’s essentially what Yellowtail did, right?

Darren:

Yeah.

Liam:

I don’t know how much they sell here; not much. They sell a lot over there.

Darren:

That’s right. You use the Australian nature of it to actually sell lots more.

Liam:

I love that Texas one.

Darren:

In one State there’s more people than all of Australia.

Liam:

I had no idea there were more people in Texas than in Australia.

Darren:

It’s about 26 million—it’s only a couple million more.

Liam:

He probably knows someone in Texas—just saying.

Darren:

If someone said to me, ‘is that great marketing?’ Absolutely, it’s great marketing and yet didn’t see a single ad.

Liam:

Correct. It’s not transformational business but it’s good business.

Darren:

I don’t know; it transformed his business. Did it change society? I think it did for Texans; they’ve now got decent wine to drink.

Liam:

They’ve got more Australian wine now. Although American wine’s not bad either.

Darren:

Well, thanks for joining me.

Liam:

Good to be here.

Darren:

It’s been an interesting conversation. We started off talking about consulting firms so what do you think will be the next agency to get bought by a consulting firm?

Liam:

I don’t think it will be a media agency.

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Darren is considered a thought leader on all aspects of marketing management. A Problem Solver, Negotiator, Founder & Global CEO of TrinityP3 - Marketing Management Consultants, founding member of the Marketing FIRST Forum and Author. He is also a Past-Chair of the Australian Marketing Institute, Ex-Medical Scientist and Ex-Creative Director. And in his spare time he sleeps. Darren's Bio Here Email: darren@trinityp3.com